Play Updates, Tuesday, 09/18/2007

In Play Updates and Reviews

by James Brown

Call Updates

Apple Inc. - AAPL - cls: 140.92 change: +2.51 stop: 133.69

Should we be concerned with AAPL? The stock only rose 1.8% versus a 2.7% rally
in the NASDAQ Composite. We're not too concerned considering the bullish
breakout over resistance at the $140 mark. Today's move looks like another entry
point to buy calls. However, more conservative readers may still want to
consider a tighter stop loss. We have two targets. Our first, more conservative
target is the $144.75-145.00 range. Our second, more aggressive target is the
$149.00-150.00 range.
We do have a very wide (aggressive) stop loss because the
markets and AAPL have been so volatile. The P&F chart is still bullish with a
$180 target. We do not want to hold over the mid October earnings report.

BRCM was already looking strong ahead of the Fed's announcement. By the closing
bell the stock rose 4.1% and hit a new six-week high. Volume was almost double
the normal, which is a good sign for the bulls. Our target is the $39.85-40.00
range. The Point & Figure chart is bullish with a $49 target.

As expected the financial stocks rallied sharply. C soared more than 5% and
broke through potential resistance at $48.00 and its 50-dma. Our initial target
is the $49.85-50.00 range but we might decide later to add a more aggressive
target at the 200-dma.

Today's rebound in IBM looks like a new entry point given its breakout above the
short-term trend of lower highs and its 10-dma. However, we would only suggest
new positions here if you believe the market rally will continue and that IBM
can push past resistance near $119-120. We are going to adjust our stop loss to
$113.90. The stock has already hit our $118-120 target range. Our second,
more-aggressive target is the $124.00-125.00 zone. FYI: The Point & Figure is
very bullish
with a $177 target.

The fed-induced rally today helped MTW produce a 5% gain and achieve a new
six-week high. Volume came in above average on the move, which is bullish. Our
post-split target is the $44.00-45.00 range. Our post-split stop loss is $37.48.
The Point & Figure chart is forecasting a $56 target.

More aggressive traders might want to consider new positions on SYK right here.
We are going to stick to our plan and wait for a new relative high. We're
suggesting readers use a trigger to buy calls at $70.65. If triggered at $70.65
our target is the $74.90-75.00 range. Given the length of SYK's consolidation we
would actually aim higher, maybe the $77.50-80.00 range, but we don't have much
time and plan to exit ahead of the mid October earnings report. The P&F chart is
bullish
with an $83 target.

Uh-oh! The mortgage lenders didn't move much today even though LEH turned in a
positive earnings report and the Fed proved to be very cooperative. LEH isn't a
lender but as a major financial company with potential exposure to the sub-prime
sector their report today should have let investors breathe a sigh of relief.
Yet the mortgage lenders did not participate in this afternoon's volatile market
ride higher. Readers may want to turn more defensive on TMA given today's
performance (+1.9%).
We have two targets for TMA. Our first target is the
$16.25-16.50 zone. Our second target is the $17.50-19.00 range. The P&F chart
has reversed into a new buy signal with a $19.50 target. We do not want to hold
over the mid October earnings report.

Put Updates

None

Strangle Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call
and an OTM put on the same stock. The strategy is neutral. You do not care what
direction the stock moves as long as the move is big enough to make your
investment profitable.)

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AutoZone - AZO - cls: 113.12 change: +4.50 stop: n/a

AZO experienced a big move (+4.1%) and some big volume but it wasn't enough. We
were expecting a much bigger move on the combination of its earnings report and
the Fed meeting. We're going to stick it out and see if AZO can keep climbing
but more conservative traders may want to just exit now to try and salvage as
much of their capital as possible. We listed two strangles. The first strangle
was with the September $115 calls (AZO-IC) and the September $105 puts (AZO-UA)
with an estimated
cost of $2.50. We want to sell if either option hits $3.85 or
higher. Our second combo suggested the September $120 calls (AZO-ID) and the
September $100 puts (AZO-UT) with an estimated cost of $0.95. We would sell if
either option hits $1.85.

Positive earnings news from LEH and the Fed news today helped BSC post a 3.3%
gain. Volume came in above average on the move. Shares of BSC are now testing
resistance near $120 and its 50-dma. Earnings for BSC are due out on September
20th before the market open. Wall Street expects a profit of $1.98 a share.
We're not suggesting new positions at this time. Currently our strangle involves
the October $115 call (BSC-JC) and the October $95 put (BVD-VS). Our estimated
cost was $9.50
and we want to sell if either option hits $14.00 or more. The
company is expected to report earnings on September 20th. This should be
considered a more aggressive play.

FYI: Last week we switched our strangle from September strikes to October
strikes due to a move in BSC's earnings report date. If you're holding the
September strikes it might work out. They were the Sep. $115 calls and Sep. $95
puts. Our estimated cost was $4.40. We wanted to sell if either option hit
$7.85. FYI: The Sept. $115 call hit an intraday high of $6.60 today. If you're
in the September strangle you might want to consider an early exit now!

Picked on September 09 at $105.37
Change since picked: +13.83
Earnings Date 09/20/07 (confirmed)
Average Daily Volume = 8.7 million

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Diamonds - DIA - cls: 137.35 chg: +3.29 stop: n/a

The market's move lifted the DJIA index to a 335-point gain. The DIA followed
with a 3.29-point rally. This is a bullish breakout over resistance near $135
(13,500 for the DJIA). We're not suggesting new plays at this time. Our DIA
strangle play suggested using the September $137 call (DAZ-IG) and the September
$127 put (DAW-UW) with an estimated cost of $2.05. We want to sell if either
option rises to $3.10 or more. We have three trading days left before September
options expire.
FYI: The September $137 calls traded to an intraday high of
$1.15 today.

Same story, different index. The 1/100th version of the DJIA is the DJX and it
rose 2.5% on today's rally. We're not suggesting new positions after the Fed
meeting tomorrow. We listed two separate strategies. Our September strangle
suggested the September $137 calls (DJY-IG) and the September $132 puts (DJW-UB)
with an estimated cost of $1.25. We want to sell if either option hits $2.00.
Our October strangle suggested the October $137 calls (DJY-JG) and the October
$132 puts (DJW-VB)
with an estimated cost of $4.75. We want to sell if either
option hits $6.75. FYI: The September $137 calls hit an intraday high of $1.20.

Picked on September 16 at $134.43
Change since picked: + 2.96
Earnings Date 00/00/00
Average Daily Volume = million

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Lehman Brothers - LEH - cls: 64.49 chg: +5.87 stop: n/a

A better than expected earnings report and a helpful FOMC meeting propelled
shares of LEH to a 10% gain. Meanwhile the September $65 call more than doubled
and is trading at $0.65bid/$0.85ask. We need to see some follow through over $65
for us to be profitable. We're not suggesting new positions at this time. This
is an aggressive play since the September options expire in three days. We
suggested the September $65 calls (LES-IM) and the September $55 puts (LES-UK).
Our estimated cost
was $1.55. We want to sell if either option hits $2.50 or
higher.

The big market move lifted the OEX to a 2.7% gain. The September $700 call hit
an intraday high of $15.00 and is currently trading at $11.30big/12.20ask. We're
not suggesting new positions at this time. Our strangle strategy suggested using
the September 700 call (OEZ-IT) and the September 660 put (OEY-UL) with an
estimated cost of $14.30. We are adjusting our target to sell if either option
hits $19.50 or more.

The XLF produced a sharp 3.7% gain and a bullish breakout over resistance near
$34.00 and its 50-dma. Yet it wasn't enough to put us in the profitable column
yet. We're not suggesting new positions at this time. We're going to be
aggressive and suggest the September options, which expire in three days. Our
suggested strangle used the September $35 calls (XLF-II) and the September $33
puts (XLF-UG) with an estimated cost of $0.65. We want to sell if either option
hits $0.95 or higher.

Dropped Calls

Triumph Group - TGI - cls: 82.00 change: +1.14 stop: 75.85

Our second target has been achieved. TGI hit an intraday high of $82.75 thanks
to the market's widespread rally. Our first target was the $79.75-80.00 range.
Our second, more aggressive target was the $82.50-84.00 range.

Dropped Puts

Ashland Inc. - ASH - cls: 62.94 change: +2.81 stop: 61.01

Shares of ASH were acting bullish this morning way before the Fed meeting. The
stock hit our stop loss at $61.01 around 10:40 a.m. this morning. The breakout
past resistance at $61.00 and its 50 and 100-dma looks like a potential entry
point for bullish positions although if you want to switch directions we'd wait
for a dip.

A lot of our potential gains in AYI just evaporated under today's 5.7% rebound
in the stock. Shares pushed past resistance near $50.00 and its 10-dma. We're
suggesting an early exit now to avoid or limit any losses. We had been
suggesting that readers do some profit taking ahead of the Fed meeting today.

WHR still has a bearish trend of lower highs but we think it's wise to exit
early. Shares have been building on support near $90 the past few days and the
Fed's decision today inspired some serious buying and short covering. We're
closing the play early.

The FOMC news today inspired a huge $5.00 move in shares of X. The stock raced
past resistance near $93.00, at its 200-dma and its 50-dma. The stock hit our
aggressive (wide) stop loss at $96.71. This looks like a serious bullish
breakout but we wouldn't want to chase it here with calls.

The sell-off in oil and oil stocks is nowhere in sight. Crude continues to march
to new record highs. Oil stocks joined the rest of the market charging higher.
The XLE responded with a 3% rally toward resistance near $75.00. It was our
suggested strategy to buy puts on a breakdown with a trigger to open plays at
$71.15. That hasn't happened and given the move today we're dropping XLE as a
candidate at this time. Truly aggressive traders might want to watch for a
failed rally near $75.00,
which could suggest a potential bearish double-top
pattern.